What is the Sharia and legal definition for guaranteeing my right (promissory notes/trust receipts/etc.), and what is the status of the amount he paid as profits: do I continue to demand it until repayment, or is it deducted from the principal amount if a document is issued for the amount?
Your borrowing from your sister with a fixed monthly interest is precisely usury (riba) and is impermissible. Similarly, it is not permissible for your sister to deposit her money in an interest-based bank with a fixed interest. As for your agreement with your friend, it is a valid Mudarabah (profit-sharing partnership). You do not have the right to demand profits from him as long as the work has stopped and no profits were generated. The agent (Mudarib) is to be believed by his oath regarding his claim of no profit or loss. There is no objection to documenting your money with your friend and having it witnessed by any means (acknowledgment, promissory note, check, trust receipt), as long as it does not involve usury or consuming wealth unlawfully.
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